The end of the year is a hectic time for all of us with travel, family commitments, and the holidays, but as a business owner you have even more responsibilities; here’s a <strong>QuickBooks year-end checklist</strong> to help you get it all done:
<strong>Accounting</strong>
While it’s critical to manage your financials throughout the entire year, it is even more important in the month of December. You can make your life a whole lot easier come tax time by keeping excellent financial records (and making sure they remain in order). You can do this by:
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<li><strong> Running A Couple Standard Reports</strong></li>
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Use the month of December to run your financial reports to see what your financial standing is and how it stands up to last years. Use your accounting system and pull together a complete financial report, which usually includes a balance sheet, cash flow statement and a profit and loss statement.
The profit and loss statement is especially important. This report will tell you not only the state of your current finances, but also what your business outlook is for the following year. Use this report to take a close look at this year’s profits. Did you make more than expected? If you did, this would be a good time to consider making big purchases that can be recorded for depreciation in the future.
As always, talk to your accountant first to ensure you have enough cash and to be sure you understand the rules of depreciation fully.
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<li><strong> Do An Analysis of Your Business’s Cash Flow</strong></li>
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Your cash flow is the most accurate way to see how you spent your money during the year. You will need to look at three pieces of your cash flow:
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<li>Operating expense cash flow (e.g. expenses and revenue)</li>
<li>Investing cash flow (e.g. assets sold and assets purchased)</li>
<li>Financial activities cash flow (e.g. loans and loan repayment)</li>
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<li><strong> Verify Vendor Data</strong></li>
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Go through all the vendors listed in your accounting system; verify each vendor’s contact information, including their email address, contact name and phone number. Take the time to delete any inaccurate information and inactive vendors. If you have the time, you can also see if any inactive vendors would be worth pursuing again.
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<li><strong> Reconcile Your Accounts Receivable</strong></li>
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Always keep a list of unpaid invoices or which clients haven’t paid you for work that’s been completed. If at all possible, try to collect on any unpaid invoices prior to year-end. This influx of cash will give you a fresh start heading into the next year.
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<li>Go Over Your Benefits and Payroll Carefully</li>
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Identify whether any corrections need to be made to benefits or payroll prior to the end of the year. This will help make sure that taxable fringe benefits (for instance a company car or third-party sick pay) are accounted for. Other easy to forget benefits include health and life insurance, educational reimbursement and transportation subsidies.
<strong>Information Technology (IT)</strong>
Information Technology is another critical piece of your <strong>QuickBooks year-end checklist</strong>. The IT checklist includes:
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<li>Back Up Data</li>
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You need to take the time to back up all your data and make sure it is secure. This includes all your accounting files, client files, emails and creative briefs. You should also do this for all of your employees. Provide each employee with access to a cloud-based storage system or another external hard drive to help ensure all your business’s data is secure.
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<li>Back Up Your Contacts</li>
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Whether most of your business is done via email or on the phone, be sure to back up all your contact information, even if it entails using an old Rolodex.
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<li>Download All Reports And Files</li>
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If you have only kept reports and documents on a cloud-based storage system (such as Dropbox), or if they have only been saved within the system you used to create them (e.g. QuickBooks), take the time to download a copy of each file and then back them up along with everything else. A golden rule to follow for data backup is the 2:1 ratio. In other words, create two separate digital copies and store them in two separate locations, plus one more offline copy that is preferably stored in a different location.
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<li>Evaluate The Way You Name Files, And Make Necessary Adjustments</li>
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If you don’t currently have a file-naming system in place across your company, this would be a great time to implement one. For instance, if you always save receipts manually as Word documents, you could use a naming system such as “LastName-InvoiceNumber-Date,” or a similar system.
A file-naming system is of great importance for businesses that share servers with multiple employees. First, look through your own files and make sure they’ve been named appropriately. Change any file names that aren’t clear so you don’t have to spend a lot of time searching for them in the future.
<strong>Human Resources</strong>
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<li>Decide If A Bonus or Other Year-End Incentive Will Be Offered</li>
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Whether you distribute bonuses (or other rewards) prior to the year-end or in the month of January makes a difference on your taxes. In fact, it can have a direct impact on your reported profits.
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<li>Consider Staffing Needs For The Next Year</li>
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Go through an inventory of your employee roster and decide if you will need to hire any additional staff members for the coming year. Make sure you have the budget to support more staff salaries.
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<li>Put Together A List of Your Company’s Accomplishments From The Last Year</li>
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Your staff will be excited to hear about all the accomplishments your business has made during the last year. Share this list with them and take the time to recognize those employees that performed above and beyond what was expected.
<strong>General Business</strong>
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<li>Count Your Inventory</li>
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If your business stores any materials or products on-site or in a warehouse, be sure to count your inventory before the end of the year, and make any necessary adjustments to the records. If your count shows major discrepancies, it would be wise to investigate. You will not only need to ensure you are keeping accurate records, but also make sure you aren’t experiencing internal losses.
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<li>Take A Look Back At This Year’s Goals, and Make Some New Ones</li>
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The final step in this <strong>QuickBooks year-end checklist</strong> is to assess how you did with meeting your goals. Look at your customer feedback, financial statements, ask for employee feedback and take note. Did you reach all your goals? Did you have to take a different path to achieve success than you would have expected?
Take what you’ve learned and set new goals for the next year. While financial goals should be a big piece, you also need to include customer and professional goals too.